Vijay C Roy
Tribune News Service
Chandigarh, March 26
Are you an investor and still holding shares of listed companies in a physical format? To get full value of your investment, you need to ensure that your shares are dematerialised before March 31.
According to estimates, shareholders of around 5,000 listed companies still have physical shares in their possession.
Come April 1, shareholders will not be able to trade or transfer these shares if they are in physical format. The shareholders need to convert these share certifcates into demat form if they wish to trade or transfer. Further, shares held in demat form will ensure safe and hassle- free transaction for investors.
Less than 4% people of the northern region comprising Chandigarh, Punjab, Haryana, Himachal Pradesh and J&K have a demat account but active investors are even lesser.
"Every day we are getting requests for conversion of physical shares into demat form. The investors who are holding shares in physical form should consider opening a demat account and submit request for dematerialisation of their shares in order to protect the liquidity of shares," said V Kumar, director, Vikson Securities (P) Ltd.
Earlier, the deadline was December 5, 2018. However, having received representations from shareholders for extension of date for compliance, the deadline was extended by SEBI. Now, the last date for dematerialisation of physical shares has been extended to March 31.
The amendment by SEBI aims at curbing frauds and manipulation risk in physical transfer of securities by unscrupulous persons besides ensuring safe and easy transaction to investors.
"Though investors can continue to hold shares and securities in physical form even after the deadline, they will not be able to place the shares with the company or its registrar for transfer or trading after the deadline," said Gurmeet Chawla, director, Master Capital Services.
Nowadays shares are issued in demat form. But prior to 2000, listed companies used to issue physical share certificates to investors. The transaction through the paper share certificate was not only opaque but also a time-consuming process.
Also, there have been instances when people having shares in physical format find it difficult to sell or transfer their holding. There was also a risk of losing the share certificates to theft and forgery. Also, in case of loss of shares or theft, getting duplicate share certificates, too, was a time-consuming and cumbersome process.
According to experts, the dematerialisation of shares started in late 90s with the setting up of National Securities Depository Limited (NSDL). With the new services, the securities market has witnessed benefits of electronic shares. The move took the investor confidence by storm and thus investors gradually moved to demat accounts and paper share transactions almost vanished over a period of time.
How to dematerialise shares…
Step 1: Open a demat account with NSDL or Central Depository Services Ltd through banks or brokers
Step 2: Fill dematerialisation request form to convert paper shares into electronic format.
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